Hasibul Aman

Bangladesh Bank (BB) has injected fresh fund into the money market to meet an extra demand ahead of Eid as well as helping ease the heated call money market.

The inter-bank call money rate was stable on Wednesday despite of withdrawing pressure of cash from the banks ahead of the Eid-ul-Fitr festival, treasury officials said.

The central bank last week provided the banking sector with a daily liquidity support of Tk 80 to 90 billion through repurchase agreements (repo), Tk 10 to 15 billion higher than that of previous week.

The excess pumping of liquidity into the money market was eying on meeting an extra demand ahead of the country’s biggest religious festival.

“The total amount of daily liquidity supply through repo currently jumped to Tk 80 to 90, which is Tk 10 to Tk 15 billion higher than the normal volume,” an official of Securities Department of BB said on Thursday.

Another BB official said there is no liquidity shortage and the money regulator is supplying as per the demands of the market to negotiate the extra pressure on liquidity from the demand side before the biggest Muslim festival. “Bangladesh Bank, as the lender of the last resort, is providing repo as soon as banks are demanding,” he said.

He also informed that the inter-bank call money rate was hovering around 17 percent on average last week, soaring from 7 to 8 percent in the previous week.

But the lending rates among banks reportedly hit 25 percent on Thursday.

The rate, however, already surpassed the lending cap set by the regulator. Earlier in January this year, BB put a ceiling on the inter-bank lending rate at 12 percent to avoid volatility in the banking sector.

The BB official said it is usual that call money rates heat up before the Eid, the highest demanding period of liquidity.

It is not appalling, if the rate rises around 20 percent as the current lending rate for the public is nearly 16 percent. But it will be a problem if the rate soars to 25 to 30 percent, he added.

Call money rate hit a record high to 190 percent in mid December last year, leaving the money market in a volatile situation.

The rate took a volatile turn as the banks themselves dismantled their asset-liability management, for which many of them were show caused later by the regulator, the BB official pointed out.

The money market, however, remained comparatively stable this time as banks had been sent caution notes about the heated up liquidity market, BB sources said.

They were also repeatedly warned of bringing down their credit-deposit ratio (CDR) within the set limits, which might have contributed to the present comparatively eased liquidity situation, the official added.

News: Daily Sun/ Bangladesh/ Aug-27-2011

The inter-bank call money rate on Thursday, the last working day of the week, hit 25 percent as the cash withdrawal took place in larger amounts from various banks ahead of the biggest religious festival Eid-Ul-Fitr.

Although the central bank fixed the rate for the day at 20 percent early on Thursday, the rate went up by 5 percent.

Bangladesh bank sources said that commercial banks on Thursday transacted Tk 55 billion, Tk 130 million more than that of the previous day.

M Jahangir Alam, executive director of the central bank told daily sun that 20 percent call money rate against FDR rate of 12 percent is quite usual before Eid.

He said there is no sign of liquidity constraint in the market as the number of borrower is very less against much more number of depositors.

There is no crisis of foreign currency in the market. As we have released sufficient dollar in the market the local currency Taka has been appreciated against the greenback, he said.

“We believe that the market should be allowed to move on its way rather than imposing anything decision on it,” Jahangir Alam added.

He however said, the central bank is keeping sharp watch on the currency market so that the market cannot turn abnormal.

A few banks including the country’s largest state-owned commercial bank, Sonali Bank and Agrani Bank had to borrow money from the market yesterday to meet growing demand from the depositors.

Sonali Bank borrowed Tk 2.55 billion yesterday.

Managing director in-charge of Sonali Bank Atiqur Rahman told daily sun that borrowing required funds through the call money market is a very common practice in banking culture and before a big festival like Eid, borrowing sometimes becomes an inevitable for some banks.

Virtually the call money rate ranged from 12 percent to 25 percent on Thursday as some of the non-banking financial institutes (NBFI) charged up to 25 percent.

Managing director of Agrani Bank, Syed Abdul Hamid said the call money normally fluctuate within a certain limit but if it crosses the limit even abnormally before festivals like Eid it will not be surprising.

Abdul Hamid however hoped that Thursday’s call money rate could come down below 15 percent at the end of the day but finally the rate increased to some extend at the day’s closing.

Meanwhile, some executives of private commercial bank said making unusual profit by capitalising fund constraints is quite unethical.

Talking to daily sun managing director of Islami Bank Mohammad Abdul Manna said that such greed-based and profit mongering practices by some banks should be stopped.

News: Daily Sun/ Bangladesh/ Aug-26-2011

Ershad Hossain has recently joined City Bank Capital Resources Ltd, a fully owned subsidiary of the City Bank, as managing director.

Prior to joining City Bank Capital Resources, Hossain was the investment advisor to Equity Derivatives of Hong Leong Bank in Singapore.

He also served Standard Chartered Bank as director for foreign exchange and American Express Bank in Singapore as director for financial institutions and margin trading sales.

News: Daily Sun/ Bangladesh/ Aug-26-2011

HSBC Amanah, the Shariah compliant banking service from the world’s leading international bank, has organised a “Joy of Giving” campaign during this Ramadan.

The campaign included collecting books, toys, clothes and other non-cash gift items for underprivileged children through special “Boxes of Hope” placed at all HSBC branches in Bangladesh.

The campaign also included charity Iftaars in different towns and cities organised for street children and orphans. Prothom Alo Bondhushobha, Jaago Foundation and ActionAid are HSBC’s partners in this endeavour.

At the first phase of distributing collected items, an HSBC team led by CEO Sanjay Prakash met underprivileged children at a facility run by Jaago Foundation in the Korail slum area of the capital on Wednesday.

Over 160 kids received toys, cloths, books and other accessories as their Eid gifts. Md Shafquat Hossain – Head of Retail Banking and Talukdar Noman Anwar – Head of Marketing and Communications were also present among other officials of the Bank.

More such gifts will be distributed in the subsequent phases.

HSBC Amanah is globally organising this campaign across Bangladesh, Malaysia, Indonesia, the UAE, Qatar and the UK. Spreading the joy of giving with underprivileged children, HSBC Amanah employees and customers are endeavouring to make this Eid a special one for the children who are less fortunate.

News: Daily Sun/ Bangladesh/ Aug-26-2011

Eastern Bank Ltd (EBL) opened a new branch having all modern banking facilities at Dohar in the city yesterday.

Advocate Abdul Mannan Khan, state minister for housing and public works, inaugurated the new branch, said a press release.

Mohd Noor Ali, chairman, Ali Reza Iftekhar, managing director and CEO, Muklesur Rahman, deputy managing director, Major (retd) Abdus Salam, head of branches, Md Musa, head of admin, Ziaul Karim, head of brand & marketing, Nazeem A Choudhury, head of cards, Md Toufiqul Alam Chowdhury, head of NRB and other senior officials of the bank and local elites were also present on the occasion.

The bank has a plan to open eight more branches at different parts of the country this year, the release added.

News: Daily Sun/ Bangladesh/ Aug-15-2011